1. Field of the Invention
The present invention relates to network communications. More specifically, the present invention relates to an auction based procurement system.
2. Description of Background Information
Traditionally in the business world matching buyers and sellers is achieved through advertisement or word of mouth. This is usually followed by contacts between the buyers and sellers which sometimes include lengthy negotiations and massive paper work. Volume trading procures discounts which are usually achieved in auctions by corporations or government entities ordering large volumes of products or services.
Added time and expenses are wasted on collecting, mining, processing, and modeling prior information from a huge, selection of catalogs, trade publications, and directories. Normally this data is used to generate standard business reports and produce quantitative analyses on market trends. The above information is then correlated and analyzed to maximize savings through volume trading.
There are several types of auctions including sealed-bid auctions, ascending bid auctions, e-mail auction, seller-driven systems, and buyer-driven systems. Sealed-bid auctions are where the bidders in one single bidding round simultaneously and independently submit sealed bids to the auctioneer who then determines the auction outcome. Ascending-bid auctions are where the bidders are in a dynamic bidding process submitting bids in real-time until no more bids are forthcoming.
In e-mail auctions, an auction catalog is electronically mailed to people interested in bidding. Subsequently, bidders submit their bids on individual lots to an auctioneer via e-mail. A disadvantage to e-mail auctions is that a human auctioneer is required and it is very difficult for the auctioneer to keep the bidders updated as to the current high bids on the various items.
A system is seller-driven in the sense that they focus on the methods and processes available to the seller, allowing him to price, package, or configure goods and services more effectively. The vast majority of retail purchases utilize seller-driven, fixed-price, nonnegotiable pricing protocols. The buyer does not find the seller, rather the seller attracts numerous buyers who, as a group, determine the final selling price.
A buyer driven system is where a buyer can exercise more control over the terms and conditions of the purchase. If each buyer has a different set of purchasing specifications, communicated using non-uniform language, sellers pay a high cost to review and understand each individual request.
The following patents describe different types of auction based systems and business methods for trading various consumer products and services. U.S. Pat. No. 5,664,115 (“the '115 patent”), issued to Richard Fraser on Sep. 2, 1997, presents an interactive computer system which matches buyers and sellers of real estate, business and other property using the Internet.
The '115 patent provides for the buyer's information to be evaluated by the host system and determine whether the buyer is qualified to purchase each selected property. This computer system obtains and stores a set of records, each corresponding to a property to be sold. Each set of records can then be searched by a remote data terminal associated with a potential buyer.
The results of this search are then provided to the potential buyer, who indicates specific property listings that the potential buyer may be interested in purchasing. The potential buyer provides identifying information which is then provided to the sellers of the indicated property. This interactive computer system does not offer a method or system for volume discount pricing. The '115 patent mainly deals with real estate and other property—which is not volume trading sensitive.
U.S. Pat. No. 5,715,402, issued to Carl A. Popolo on Feb. 3, 1998, specifies a method and system for matching sellers and buyers dealing in spot metals. This is a system for managing steel inventories that aids in selling primary and secondary steel. Sellers can post detailed descriptions of an item for sale and buyers can browse or search the posted inventory. A buyer may bid on part or all of an item posted and the seller may accept or reject any bid. The bidding is done through an auction by electronic mail.
U.S. Pat. No. 5,717,989, issued to Tozzoli et al. on Feb. 10, 1998, stipulates a full service trade system for storing criteria specified by a funder relating to a trade transaction for buyers and sellers. The trade system compares the criteria with a proposed purchase order to determine whether the system can generate a payment guarantee on behalf of the funder for the buyer to the seller.
When the appropriate conditions for payment are met, the system issues funds transfer instructions to transfer payment from the buyer to the seller. This system is not auction based, instead the main purpose of this patent is to confirm that payment is made by the buyer to the seller.
U.S. Pat. No. 5,758,328, issued on May 26, 1998, and U.S. Pat. No. 5,842,178 (“the '178 patent”), issued on Nov. 24, 1998, to Joseph Giovannoli describe a computerized quotation system and method. These systems are for forming a computer based communications network of network members consisting of network buyers and sellers for processing requests for quotation for goods and services through at least one central processing unit. The system includes a filtering means for controlling the communication linkage between network members.
The '178 patent contains no central database of goods and prices, instead the buyer formulates requests and the seller analyzes each request. The system is also not auction based and does not involve volume discount type trading.
U.S. Pat. No. 5,781,911, issued to Young et al. on Jul. 14, 1998, discloses an integrated system and method for data warehousing and delivery. This system consists of an integrated automatic generation of data warehouses or data marts further integrated with an automatic delivery of information from the data warehouses to knowledge workers throughout the enterprise.
This integration allows information in the data warehouses to be delivered to immediately after every refresh of the data warehouse. This is to permit maximum utilization of the information in the data warehouses throughout the enterprise to gain the most optimum decision support. This system deals with the method for extracting data from production of on-line transaction systems and processing that data into information and distributing the information.
U.S. Pat. No. 5,794,207, issued to Walker et al. on Aug. 11, 1998, characterizes a method and apparatus for a cryptographically assisted commercial network system designed to facilitate buyer-driven conditional purchase offers. A controller receives binding purchase offers from prospective buyers. The controller makes purchase offers available globally to potential sellers. Potential sellers then have the option to accept a purchase offer and bind the corresponding buyer to a contract.
Under this method, the buyer is bound and does not have a chance to accept or reject seller's response to the buyer's offer. This is not a volume based discount trading system, instead it is a one-buyer, one-seller system. This system does not utilize a master catalog or use historical data for creating bids.
U.S. Pat. No. 5,794,219, issued to Stephen J. Brown on Aug. 11, 1998, discloses a method of conducting an on-line auction that permits individual bidders to pool bids during a bidding session. The auction is conducted over a computer network that includes a central computer, a number of remote computers, and communication lines connecting the remote computers to the central computers.
A number of bidding groups are registered in the central computer and each bidding group has a total bid for the item being auctioned. Bids are entered from the remote computers which are received in the central computer, each bid including a bid amount and a bid designation. Each bid amount is contributed to the total bid of the bidding group indicated by the bid designation.
The bidding group that has the largest total bid at the end of the bidding session wins the item being auctioned. The method then declares a winning group, the winning group being the one bidding group having the largest total bid at the end of the bidding session.
U.S. Pat. No. 5,835,896, issued to Fisher et al. on Nov. 10, 1998, explains a system and method for conducting a multi-person, interactive auction, in a variety of formats without using a human auctioneer to conduct the auction. The system allows a group of bidders to interactively place bids over a computer or communications network. Those bids are recorded by the system and the bidders are updated with current auction status information.
When appropriate, the system closes the auction from further bidding and notifies the winning bidders and losers as to the auction outcome. This patent promotes higher prices for the seller and does not give the buyer the chance to withdraw bid.
U.S. Pat. No. 5,890,138, issued to Godin et al. on Mar. 30, 1999, discloses an auction system which allows users to participate using their own computers suitably connected to the auction system.
The patent involves a method and system for providing rapid feedback of a reverse auction process and removes the user from the process once an indication to purchase has been received. Rapid feedback in combination with security of information is achieved with the method and auction system.
This method includes removing each purchaser from the auction process upon providing instructions to purchase the product at the displayed current price at the time the instructions were received. In this way the purchaser is not exposed to further decreases in the price of the product, and is removed from that particular auction process.
U.S. Pat. No. 5,905,975, issued to Lawrence M. Ausubel on May 18, 1999, specifies a computer implemented system and method of executing an auction. The system has at least two intelligent systems, one for the auctioneer and at least one for a user. The auction is conducted by the auctioneer's system communications with the user systems.
The auctioneer's system contains information from the user, system based bid information entered by the user. With this information the auctioneer's system determines whether the auction can be concluded or not and appropriate messages are transmitted to the users.
At any point in the auction, bidders are provided the opportunity to submit their current bids, as well as future bids, into the auction system's database. Participants are continually provided the opportunity to revise their bids associated with all future times or prices which have not already been reached, by entering new bids which have the effect of superseding the bidder's bid currently residing in the auction system's database.
U.S. Pat. No. 5,924,082 (“the '082 patent”), and U.S. Pat. No. 5,924,083 (“the '083 patent”), both issued to Silverman et al. on Jul. 13,1999, both describe a form of matching system. The '082 patent is a negotiated matching system which includes a plurality of remote terminals associated with respective potential counter-parties, a communication between the remote terminals, and a matching station. Each user enters trading information and ranking information into his or her remote terminal.
The matching station then uses the trading and ranking information from each user to identify transactions between counter-parties that are mutually acceptable based on ranking information, thereby matching potential counter-parties to a transaction Once a match occurs, the potential counter-parties transmit negotiating messages to negotiate some or all terms of the transaction. Thus, the negotiated matching system first matches potential counter-parties who are acceptable to each other based on trading and ranking information, and then enables the two counter-parties to negotiate and finalize the terms of a transaction.
The '083 patent by Silverman, et al. details a distributed matching system which generates and provides to trading entities a market view display, including a predetermined number of bids and offers of multiple trading instruments. These are available to each individual trading entity based on unilateral and/or bilateral credit availability between the offeror/bidder and the viewing trading entity and the quantity available to the trading entity based of available unilateral or bilateral credit. The displayed market book may consist of individual order prices and quantities, aggregated prices and quantities, and/or average prices at predetermined quantities.
Japanese Pat. No. 55-37661, issued on March of 1980, summarizes a method to obtain a foreign goods total system. This system includes goods controlled by a host computer with an information file for foreign goods or business. The system also controls the shipments of the head office and terminal equipment in branch offices connected to the host computer via transmission circuits.
Most sites on the Internet are primarily limited to situations in which the sellers advertise a product or service by posting a listing on an electronic bulletin board which can be read by potential buyers. Many auction based systems require the payment of a fee in order to gain authority to utilize the database.
Most auction based systems simply perform an item-by-item listing of products or services being offered for sale. In high volume trading, the process usually is more complicated. Instead of searching each product or service to find a desired item, there is a need in the art for tailoring a search according to a variety of criteria such as lowest price, best value, vendor performance, audits, ratings, past choices based on recurring buying patterns learned by the system, etc.
The auction based system needed in the art would permit a buyer to avoid spending unnecessary time looking through catalogs, and the seller spending unnecessary costs through advertising. In this auction based system, it would be beneficial for the seller to narrow contacts with potential buyers to those more likely to consummate a transaction.
Moreover, within the federal arena, for example, there are terms and regulations that apply to past performance. Most of these regulations are applicable to buyers/agencies giving an evaluation to a seller for past purchases over $100,000. There is a general need in the art, however, for buyers/agencies to have the ability to quickly review a seller's past auction performance and other factual activity regarding a seller's performance, as provided in performance information regarding the seller (which may include, for example, ActivityCard® information, such as provided by FedBid, Inc. of Vienna, Va.), regardless of the purchase amount. In addition, there is a lack of standardization in the evaluation criteria and the evaluation forms that different agencies use. Therefore, there is a need in the art for a system and method for permitting buyers/agencies to assess the performance of sellers using evaluation criteria and/or forms of choice, and, rather than publishing the performance evaluation, providing notice of the fact that a performance evaluation has been completed and is on record with the buyer. Further, there is a need in the art, within an auction environment, for such performance evaluation notification method to provide notification only to the evaluated seller and to buyers running auctions on which the evaluated seller is bidding.
In addition, there is a need in the art, within an auction system environment, to eliminate the incentive for sellers to request favorable recommendations from buyers, a problem that is prevalent in existing on-line auction systems such as Amazon and eBay.
Furthermore, there is a need in the art for an auction based system that is capable of capturing and/or calculating an additional transaction cost, such as a contract fee (CF) that is to be added to a bid and an associated purchase order, displayed by the auction based system as a separate line item to the buyer and seller, and provided as a separate line item in the purchase order from the buyer to the seller.
In the federal arena, for example, agencies create contract vehicles, such as Governmentwide Acquisition Contracts (GWACs) and Multi-Agency Contracts (MACs), such that any time a buyer issues a solicitation under that contract vehicle, only sellers that are holders of that contract vehicle or authorized agents of that contract vehicle holder may propose a price or a bid on that solicitation, The buyer then must pay a CF to the buyer/agency that issued the contract vehicle, which is accomplished by the buyer issuing to the seller a purchase order including the CF as a separate, reportable, auditable line item, and the seller, upon receiving payment from the buyer, submitting the CF to the buyer/agency that issued the contract vehicle. Usually, the CF is a function of the total proposed price. It may be, for example, a percentage of the price, or may have a high/low cap.
In essence, the purchase order from the buyer must include the bid price and, in addition, the CF as a separate line item. That is, the buyer would pay more to the vendor to obtain access to the contract vehicle. The vendor, in turn, provides the CF to the buyer/agency that issued the contract vehicle.
Therefore, there is a need in the art for an auction based method and system that have the ability to capture the CF and to include it as a separate line item in an auto-rebid environment, such that when ranking competing bids, the inclusion of the CF does not affect the ranking.
None of the above inventions and patents, taken either individually or in combination, describe or teach such an auction based system.